Flounder Co. both purchases and constructs various equipment it uses in its oper

Question

Flounder Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2017.

Compute the total cost for each of these two pieces of equipment.

Purchase Cash paid for equipment, including sales tax of $6,900 $144,900 Freight and insurance cost while in transit 2,760 Cost of moving equipment into place at factory 4,278 Wage cost for technicians to test equipment 5,520 Insurance premium paid during first year of operation on this equipment 2,070 Special plumbing fixtures required for new equipment 11,040 Repair cost incurred in first year of operations related to this equipment 1,794 Construction Material and purchased parts (gross cost $276,000; failed to take 2% cash discount) $276,000 Imputed interest on funds used during construction (stock financing) 19,320 Labor costs 262,200 Allocated overhead costs (fixed-$27,600; variable-$41,400) 69,000 Profit on self-construction 41,400 Cost of installing equipment 6,072

Explanation / Answer

Purchase Equipment              = $1,68,498

Construction Equipment       = $ 6,07,752

Purchase Equipment

Cash paid for equipment, including sales tax $144900

Freight and insurance cost while in transit                     $2760

Cost of moving equipment into place at factory $4278

Wage cost for technicians to test equipment $5520

Special plumbing fixtures required for new equipment $11040

TOTAL $1,68,498

Construction Equipment

Material and purchased parts ($276000 x 98%) $ 270480

Labor costs $262,200

Allocated overhead costs $ 69,000

Cost of installing equipment                                         $ 6,072

TOTAL $ 6,07,752

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